Income Taxes

Income before income taxes for the Company’s domestic and foreign operations was as follows:



	Years Ended June 30,
($ in millions)	2015		2014		2013
Domestic	$	64.3	$	178.6	$	198.0
Foreign	24.8		17.8		18.8
Income before income taxes	$	89.1	$	196.4	$	216.8

The provision (benefit) for income taxes from continuing operations consisted of the following:



	Years Ended June 30,
($ in millions)	2015			2014			2013
Current:
Federal	$	(39.3	)	$	61.3		$	49.7
State	1.2			6.5			5.9
Foreign	8.1			5.5			5.3
Total current	(30.0		)	73.3			60.9
Deferred:
Federal	60.2			(8.0		)	7.8
State	0.1			(1.4		)	2.5
Foreign	0.1			(0.3		)	(0.9		)
Total deferred	60.4			(9.7		)	9.4
Total income tax expense	$	30.4		$	63.6		$	70.3

The following is a reconciliation of income taxes computed at the U.S. Federal income tax rate to the Company’s effective income tax rates:



	Years Ended June 30,
(% of pre-tax income)	2015		2014		2013
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	2.2		2.5		2.0
Domestic manufacturing deduction	(2.7	)	(3.5	)	(2.7	)
Prior year impact of Tax Increase Prevention Act	1.7		—		—
Other, net	(2.1	)	(1.6	)	(1.9	)
Effective income tax rate	34.1	%	32.4	%	32.4	%

Deferred taxes are recorded for temporary differences between the carrying amounts of assets and liabilities and their tax bases. The significant components of deferred tax assets and liabilities that are recorded in the consolidated balance sheet are summarized in the table below. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. As of June 30, 2015, the Company had state net operating loss carryforwards of $321.7 million expiring between 2016 and 2035. Based on current year and forecasted taxable state income, we determined that it was appropriate to reverse a portion of the valuation allowance in fiscal year 2015. A tax benefit was recognized through the reduction of the valuation allowance in the amount of $0.3 million in fiscal year 2015. A significant portion of the state net operating loss carryforwards are subject to an annual limitation that under current law is likely to limit future tax benefits to approximately $5 million.



	June 30,
($ in millions)	2015			2014
Deferred tax assets:
Pensions	$	125.1		$	82.7
Postretirement provisions	48.9			66.9
Net operating loss carryforwards	20.3			20.6
Derivatives and hedging activities	18.5			—
Other	32.6			35.0
Gross deferred tax assets	245.4			205.2
Valuation allowances	(17.5		)	(17.8		)
Net deferred tax assets	227.9			187.4
Deferred tax liabilities:
Depreciation	(321.2		)	(232.3		)
Intangible assets	(26.1		)	(37.5		)
Inventories	(17.6		)	(28.8		)
Other	(6.2		)	(4.0		)
Total deferred tax liabilities	(371.1		)	(302.6		)
Deferred tax liabilities	$	(143.2	)	$	(115.2	)

As of June 30, 2015, the Company had $118.5 million of indefinitely reinvested foreign earnings for which we have not provided deferred income taxes. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes and withholding taxes in various foreign tax jurisdictions. It is not practical to calculate these taxes due to the complex and hypothetical nature of the calculations. Due to the authorization of the $500.0 million share repurchase program in October 2014, we changed our intent with regard to the indefinite reinvestment of a portion of the foreign earnings of one of our foreign subsidiaries for fiscal year 2014 and prior years. As a result of this change, we repatriated approximately $38 million during the third quarter of fiscal year 2015 with minimal tax cost.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions is as follows:



	Years Ended June 30,
($ in millions)	2015		2014			2013
Balance, beginning	$	—	$	1.4		$	2.3
Additions based on tax positions of prior years	—		—			0.6
Reductions as a result of a lapse of statute of limitations	—		(1.1		)	(1.3		)
Reductions based on tax positions of prior year	—		(0.1		)	(0.2		)
Reductions as a result of settlements with taxing authorities	—		(0.2		)	—
Balance, ending	$	—	$	—		$	1.4

The liability for unrecognized tax benefits was $0.0 million at June 30, 2015 and June 30, 2014 and $1.4 million at June 30, 2013. It is reasonably possible that the amount of the unrecognized tax benefits will change within the next twelve months; however, any such changes are not expected to have a significant impact on the Company’s consolidated financial statements.

It is the Company’s policy to classify interest and penalties recognized on uncertain tax positions as a component of income tax expense. The Company’s income tax expense included net benefits of $0.0 million, $0.6 million and $0.3 million related to interest and penalties for the years ended June 30, 2015, 2014 and 2013, respectively. In addition, no amounts were included in accrued income taxes for interest and penalties in the consolidated balance sheets as of June 30, 2015 and 2014.

All years prior to fiscal year 2012 have been settled with the Internal Revenue Service and with most significant state, local and foreign tax jurisdictions.